Footwear Inc. manufactures a complete line of men\'s and women\'s dress shoes fo
ID: 2734514 • Letter: F
Question
Footwear Inc. manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price of its finished product is $90 per pair. The variable cost for this same pair of shoes is $55. Footwear Inc. incurs fixed costs of $180, 000 per year. a. What is the break-even point in pairs of shoes for the company? b. What is the dollar sales volume the firm must achieve to reach the break-even point? a. What is the break-even point in pairs of shoes for the company? units b. What is the dollar sales volume the firm must achieve to reach the break-even point? $Explanation / Answer
Solution.
Break even point in sales doller = $180,000 / 38.89% = $462,844
Break even point in pair of shoes = $462,844 / $90 = 5,142.71 pair or 5,143 pair
Sales 90.00 Variable cost 55.00 Contribution margin 35.00 CMR 38.89 Fixed Cost 180,000.00